COMPUMEDICS LIMITED — Investor Presentation 2015

Aug 25, 2015

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Compumedics
Limited Corporate
Presenta2on
–
September
2015

1

Investor

Overview

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• :

• FY 15 Highlights $33.5m sales, revenue growth 9%, EBITDA $4.1m, NPAT $2.0m

• Core business: now highly profitable and continues to grow with the full benefits of the earnings initiatives undertaken in recent years still to flow through.

• New Product platform roll out to significantly expand our addressable market

• Growth in international sales with expansion plans in the US, Germany and China

• eHealth: Pushing ahead with the commercialization of our cloud based sleep diagnostics platform

• DWL expansion opportunity with newly granted breakthrough auto-scan TCD patent and Neuroscan foray into much larger brain analysis imaging market

• Spin offs/strategic decisions to unlock significant value for shareholders continue to be pursued

• FY16 guidance: Sales $36m-$38m, EBITDA $4.5m-$5.5m, NPAT $2.8m-$3.2m.

2

(1)
RFM:15215;
(2)
RFM:
15218;
(3)
RFM:
15214

Who

is
Compumedics?

• Compumedics is a leading global, innovative developer and manufacturer of medical devices for:

• Diagnosing sleep disorders

• Monitoring neurological disorders including long-term epilepsy monitoring (LTEM)

• Highly sophisticated brain research

• Ultrasonic monitoring of blood flow through the brain (Transcranial Doppler [TCD])

• Compumedics is a technological leader in its chosen markets:

• 1 Australia sleep & neuro diagnostics device supplier

• 1Japan sleep diagnostics device supplier

• 1 China sleep diagnostic device supplier to China’s premier facilities & #1 TCD device supplier

• 3 USA sleep diagnostic device supplier and emerging #3 supplier for neurological monitoring devices

• Compumedics has a rich intellectual property portfolio

• Compumedics e-Health platform is the next growth phase in the company’s development

• Compumedics listed ASX Dec 21, 2000

3

Directors

&
Execu2ve
Team
Key
Management

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David
Burton,
Ph.D.
Execu5ve
Chairman,
CEO
Founder,
Tenure
26yrs
NED
Mr.
David
Lawson
Mr.
Alan
Anderson Chief
Financial
Officer
&
Leading
USA
AWorney
Company
Secretary
CMP
Tenure
:
11
yrs
CMP
Tenure
13
yrs
Mr.
Warwick
Freeman Kerry
Hubick,
Ph.D .
Mr.
Christoph
WiGe
Chief
Technology
Officer
Trademark,
Patent
&
General
Managing
Director
Compumedics
Germany
CMP
Tenure
15
yrs
General
Legal
AWorney
GmbH
CMP/DWL
Tenure
24
yrs
CMP
Tenure
7
yrs
4
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A

Tradi2on
of
Innova2on

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Comperio
DQ
Summit
IP
SynAmps2
2004 2005
Somté
2003
2001 Siesta
802
Siesta
2000 2005
P
Series
1994
S
Series
1987
Somté
PSG
2006
Neuvo
LTM
SynAmpsRT
2007
2008
CURRY6
Somnilink
SPAP
2009
2010
Grael
HD
Somfit
2010
2015 Somté
PSG
2.0
2011
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5

Established

Client
Profile

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6

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Core

Sleep
and
Brain
Diagnos2c Monitoring
Business

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7

FY15

Results

• Revenue
  and
  profit
  figures
  in
  line
  with
  guidance

• New
  sales
  orders
  taken
  in
  FY2015
  were
  19% higher
  than
  new
  sales
  orders
  taken
  in
  FY2014. Driven
  by
  growth
  in
  US,
  China
  and
  Europe.

• Sales
order
backlog
con2nues
to
decline, although
late
rush
of
sales
orders
received
at
30 June
2015
does
not
make
that
apparent
with $5.5m
of
sales
orders
on
hand
at
30
June
2015 compared
to
$6.0m
at
same
2me
last
year.

8

Revenue

Composi2on
at
≈$33m 30
June
2015

**By

geographic
region**

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Europe,
16%
USA,
34%
Asia,
34%
Aust,
16%
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By
product/market

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Tech.
Supply
Service,
Items,
8%
Sleep,
9%
28%
Brain
Neuro,
Blood
12%
Flow,
Brain
21%
Res,
21%
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So#ware
upgrades
5
to
10%
of
system
sales

Compumedics
sells
directly
to
end-­‐user
customers
in
Australia,
USA
and
Germany
and through
its
network
of
more
than
50
distributors
to
all
other
parts
of
the
world

9

Core

Business
Overview

• The core business has returned to strong operating profitability and is positioned for significant earnings growth in the years ahead

• Cost reduction initiatives for the assembly and manufacture of key products are yet to fully flow through to the bottom line, expected to occur in FY16

• With both redesigned and new products released to market we will be in a position to aggressively expand sales, particularly in the US market

• ®

• Compumedics technology is world leading. We now have a competitive cost base to bring that leading technology to the mass market (vs previously the premium market)

• 20,000 installed systems worldwide. Strong brand name and reputation. Customers like buying Compumedics.

10

Interna2onal

Growth
–
Geographic Expansion

• Expand
  our
  US
  sales
  force
  and
  management
  team to
  further
  build
  our
  market
  presence
  in
  the largest
  markets
  for
  sleep
  diagnos2cs
  and neurology.

• • Establish
  an
  office
  in
  Germany,
  a
  rela2vely untapped
  market
  for
  Compumedics
  to
  date.

• • Push
  into
  the
  Chinese
  neurology
  market
  –
  a massive,
  untapped
  and
  rapidly
  growing opportunity.
  We
  are
  already
  no.1
  in
  premium sleep
  diagnos2cs
  with
  extensive
  long
  term rela2onships
  with
  major
  distributors.

11

Product		Used for	Bought by	Average selling price
Grael		Sleep and neurology	Hospitals, doctors and service providers	USD17,500
Somte PSG		Sleep	Hospitals, doctors and service providers	USD10,000
Siesta		Sleep and neurology	Hospitals, doctors and service providers	USD18,000
Neuvo LTM		Neurology	Hospitals, doctors and service providers	USD35,000
Synamps RT		Brain Research	Universi2es and teaching hospitals	USD38,000
CURRY		Brain research and neurology	Universi2es, teaching hospitals and regular hospitals	USD20,000

12

Historical

Full
Year
Revenues 12
months
to
30
June

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					Shipped and invoiced	Shipped and invoiced
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
			FY2013		FY2014	FY2015	F'cast FY2016
					H1 Rev	F'Cast Rev

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Historical

Full
Year
Earnings 12
months
to
30
June

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NPAT
EBITDA
4
6
5
3
4
2
3
1
2
0
FY2013
FY2014
FY2015
Fcast
1
FY2016
-­‐1
0
FY2013
FY2014
FY2015
Fcast
-­‐2
FY2016
NPAT
F'Cast
NPAT
EBITDA
F'Cast
EBITDA
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Full
year
EBITDA
for
FY2016
is
es2mated
between
$4.5m
and
$5.5m.
Excluding
Medical
Innova2on
costs EBITDA
is
es2mated
between
$5.5m
to
$6.5m

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Employee

Composi2on
at
≈120
staff 30
June
2015

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**By

geographic
region**

**By

func5on**

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Mid
Asia,
Admin
Sales
&
East,
USA
&
Quality,
3%
&
Fin,
Mark,
1%
LA,
2%
14%
Europe,
23%
Manuf,
31%
30%
20%
Service,
Aust,
R&D,
19%
35%
22%
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Compumedics
has
its
Head
Office
in
Melbourne,
Australia
with
addi2onal offices
in
CharloWe
(NC),
USA
and
Singen,
Germany

15

Tide

turning
post
GFC
and
high
AUD

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45,000

5,000

40,000

4,000

35,000

3,000

30,000

25,000

2,000

20,000

1,000

15,000

-­‐

10,000
-­‐1,000

5,000

-­‐

-­‐2,000
2009
2010
2011
2012
2013
2014
2015
Revenues
EBITDA
1.2000
1.0000
0.8000
0.6000
0.4000
0.2000
0.0000
2009
2010
2011
2012
2013
2014
2015
AUD/USD
Exchange
rate
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16

Growth

Drivers
–
Core
business

• Compumedics/NeuroScan LTEM innovative brain analysis software and high performance amplifiers are unrivalled world class technology

• We have >20,000 systems installed worldwide. Strong reputation and brand name. Customers like buying from Compumedics.

• Earnings initiatives to flow through in FY16.

• Opportunity to significantly grow the USA business through strengthening of the management team and expansion of the sales force.

• Expansion into untapped German market

• Push into the Chinese neurology market

• Ideally positioned to accelerate organic growth and value realisation

17

Earnings

improvement
ac2vi2es

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• Outsourcing
  Manufacturing
  –
  lower
  cost
  regions
  of
  China
  and
  Taiwan

• EEG
  cap
  produc2on
  completely
  relocated
  at
  Dec
  14
  and
  Grael
  produc2on
  to
  be completed
  by
  Dec
  2015

• Offshore
  or
  specialist
  purchasing
  houses
  to
  increase
  quality
  and
  drive
  down
  costs. Grael
  and
  Somte
  purchasing
  reloca2on
  complete
  Dec
  2015

• Streamlining
  of
  logis2cs
  (final
  product
  assembly,
  tes2ng
  and
  shipment)
  as
  the business
  grows

• Completed
  redesign
  of
  all
  major
  product
  lines
  for
  aggressive
  global
  full
  market access
  -­‐
  based
  on
  at
  least
  halving
  cost
  of
  goods
  but
  retaining
  quality
  and performance

• New
  genera2on
  Grael
  to
  be
  released
  for
  sale
  Dec
  2015

• These
  benefits
  will
  start
  to
  flow
  through
  in
  FY16
  and
  beyond

18

Growth
Strategies
–
core
business USA
Clinical
Sales
Force
Expansion

More sales representatives > more revenue Past for both sleep and neurology

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USD4.5m

FY2015 - Now

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USD6.4m

FY2016

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FY2017

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USD10.0m USD15.0m

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China
-­‐
We
are
the
number
1
Premier
Supplier Compumedics
Clients
in
China

China
Sales
–
USD’s 10 5 0 FY12
FY13
FY14
FY15

20

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Strategic

Value
Realisa2on

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21

Strategic

value
realisa2on

The
company
is
currently
considering
op2ons
to
simplify
its business
and
unlock
significant
value
for
shareholders
by:

• Spinning
  out
  its
  Germany
  based
  DWL
  Transcranial
  Doppler (TCD)
  ultrasound
  blood
  flow
  business

• Spinning
  out
  its
  Brain
  Research
  business
  (NeuroScan)

22

DWL

Spin
out
opportunity

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• DWL is the founding business and global leader in TCD ultrasound.

• Short term growth opportunities in 3D Transcranial Colour Doppler (TCCD)/Duplex Imaging

• Medium term growth opportunities in TBI and Stroke Market

• 3D TCCD is a US$900m vs DWL’s current market of $US30m. Relatively small investment required in upgrading the user interface to be able to play in this market.

• Traumatic Brain Injury (TBI) – DWL work with some of the world’s most respected researchers.

• Continue to build commercial momentum with 3D TCCD and TBI opportunities, with a view to spinning these out as circumstances and timing allow.

• Substantial potential DWL value realisation based on revenue multiples of comparable entities:

• Revenue of $US6m (based on 4x current revenue) = $US24m

• Compumedics remains focused on continued DWL business growth in

• conjunction with the acceleration of organic growth and value realisation

23

Brain

Research
Spin
Out
Opportunity

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• Growth outlook – significant for Neuroscan CURRY – World’s best of class brain analysis software

• Enormous neurology devices demand – est. $7bn pa by 2017 up from $2bn in 2010

• CURRY multi modal brain analysis technology – traditional research market - $50m pa

• CURRY – multi modal brain analysis monitoring – new imaging market - $4bn pa

• CURRY – MEG Imaging – currently the preferred solution

• NeuroScan/CMP – 9% revenue growth expected. EBITDA approx. $1.1m

• Similar AIM IPO comparable – post money 5x revenue market capitalization

• Compumedics remains focused on continued Neuroscan business growth in conjunction with the acceleration of organic growth and value realisation

24

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eHealth

–
Next
Phase
in Compumedics
Growth

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25

Medical

Innova2ons
–
eHealth

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• Compumedics is developing eHealthMedics, an online professional sleep services platform

• Sleep diagnostics is traditionally delivered as a lab-based (equipment intense) or Home Sleep Testing service eHealthMedics has re-architected its solution such that the sleep monitoring and algorithms that translate the raw data into sleep stages run on the cloud, so that all that is required on-site is a mobile sleep system to buffer and transfer the raw data

• The platform is based on Compumedics’ core world-class sleep diagnostic technology, built up over more than two decades and $100m+ in accumulated R&D and $500m+ in total system sales

• eHealthMedics will provide the backbone and infrastructure to professional sleep service providers

26

eHealthMEDICS

-­‐
Compe22ve
Advantage

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• The
  scalability
  and
  cost
  efficiencies
  of
  eHealthMedics
  vs
  tradi2onal
  sleep
  diagnos2cs allow
  the
  service
  to
  accommodate
  very
  large
  sleep-­‐disordered
  popula2ons,
  even
  in regions
  where
  private
  or
  public
  health
  insurance
  is
  limited
  or
  non-­‐existent
  (eg
  China
  –
  a key
  market
  for
  eHealthMedics)

• The
  numerous
  validated
  and
  proven
  algorithms
  &
  report
  templates
  have
  been
  developed over
  25+
  years
  of
  ongoing
  R&D
  –
  they
  cannot
  be
  replicated

• Compumedics
  possess
  a
  broad
  spectrum
  of
  medical
  diagnos2c
  and
  monitoring technologies
  that
  are
  unrivalled
  globally

• These
  technologies
  have
  served
  clients
  including
  NASA,
  Stanford,
  Mayo
  Clinic,
  Yale, Beijing
  University,
  University
  of
  Tokyo
  and
  a
  range
  of
  leading
  hospitals
  worldwide,
  as
  well as
  provided
  the
  infrastructure
  for
  the
  worlds
  largest
  home
  based
  sleep
  study
  and database
  of
  its
  kind
  –
  the
  USA
  Na2onal
  Ins2tute
  of
  Health’s
  ‘Sleep
  Heart
  Health
  Study’

• The
  above
  provides
  eHealthMedics
  with
  the
  ability
  to
  leverage
  existent
  proven
  systems and
  rela2onships
  into
  the
  professional
  sleep
  services
  space
  with
  “gold
  standard”, regulatory
  approved
  and
  cer2fied
  diagnos2c
  technology
  backed
  by
  key
  opinion
  leaders within
  the
  industry

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eHealthMEDICS

–
Making
Progress

==> picture [720 x 5] intentionally omitted <==

• eHealthMedics
  has
  already
  locked
  in
  excess
  of
  $10m
  of
  forward
  orders
  over
  the
  next
  three years
  (primarily
  in
  China)
  for
  its
  professional
  services
  plaxorm.
  Ini2al
  pilot
  sites
  commence in
  May
  and
  June
  this
  year

• Opera2onal
  systems
  have
  been
  developed
  for
  the
  cloud
  based
  capture,
  transfer
  and transla2on
  of
  medical
  grade
  sleep
  parameters
  from
  any
  web-­‐enabled
  device.
  The
  system can
  then
  store,
  analyse

• and
  interpret
  that
  data
  in
  a
  simple
  and
  ac2onable
  manner,
  reducing
  the
  need
  for
  on-­‐site professionals

• Compumedics
  are
  now
  approaching
  a
  select
  group
  of
  strategic
  partners/investors
  to expedite
  the
  process
  and
  rapidly
  deploy
  the
  plaxorm
  to
  market

• Key
  partners
  being
  pursued
  include
  web,
  telco,
  eHealth,
  consumer
  health/electronics providers
  and
  device
  manufacturers

• Compumedics
  will
  update
  the
  market
  as
  significant
  further
  progress
  is
  achieved

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eHealthMEDICS

-­‐
We
bring
to
the
table
a
eHealth
services
plaxorm that
leverages
core
competencies
built
over
25
years

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----- Start of picture text -----

mHealth Product Ecosystem: Required Competencies • Inc.
medical
data
security
[tradi5onal
business]
(FDA,
CE,
TGA
compliant,
US
est.
1987
HIPPS)
•
Medical
grade
•
Established
‘life-­‐signals’
Cloud
global
•
Over
250
product
patents
monitoring
Medical
Regulatory
network
of
•
Established
medical
Data
Compliance
Physicians
creden5als
-­‐
000s
of
medical
Processing
publica2ons
/
leading
R&D
Patents
/
Health
team
IP
Services
•
Government
/
regulatory
cer2fica2on
and
compliance
• new
Clinical
diagnos5c
so^ware
Clinical
(inc.
sleep
disorders,
neurology,
Govt.
mHealth
Grade
heart,
epilepsy,
diabetes)
Funding
Pla;orm
• Products
Medical
monitoring
devices
–
home
and
hospital
• •
Cloud-­‐based
algorithms,
data
Eligibility
for
•
Applica2ons
processing
and
security
govt.
health
•
Network
• scheme
rebates
•
Global
Network
of
Physicians
Sensors
/
•
Clinical
monitoring
sensors
wearables
----- End of picture text -----

• Clinical
  monitoring
  sensors

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Investor

Summary

==> picture [720 x 5] intentionally omitted <==

• Core
  business
  con2nues
  to
  grow

• Interna2onal
  sales
  force
  expansion,
  neurology
  market
  opportunity
  and earnings
  improvement
  ini2a2ves
  to
  con2nue
  to
  drive
  growth
  of
  core business

• Compumedics
  remains
  commiWed
  to
  con2nuing
  to
  deliver
  superior returns
  to
  shareholders

• e-­‐Health
  plaxorm
  is
  the
  next
  step
  for
  CMP’s
  growth.
  Moving
  25+years
  and $100m+
  in
  cumula2ve
  R&D
  to
  a
  modern
  plaxorm
  to
  solve
  a
  massive
  and growing
  problem.
  $10m
  of
  contracts
  already
  locked
  in.

• Spin
  off/strategic
  decisions
  to
  unlock
  significant
  value,
  provide
  funds
  for growth
  and
  poten2ally
  capital
  returns
  to
  shareholders

• • FY16
  guidance:
  Sales
  $36m-­‐38m,
  $4.5m-­‐$5.5m
  EBITDA,
  NPAT
  $2.8m-­‐ $3.2m

30

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31